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Simple Mortgage Processes

The different infrastructures that increase the value of land to make it a real estate are wells, dams, ponds, machinery, roads, mines and ponds. There is usually a lien attached to the property that is mortgaged. The loan is secured on the property of the borrower and in case of no refund of the loan; there is a legal mechanism that will allow the lender to own the property or to sell it.

In a mortgage we have two people involved; the mortgage borrower who can be an individual who is mortgaging his home or a business that puts the commercial property (a personal business); the lender can be any financial institute like a bank, credit union and even a building company. The payment on the loan could be direct or indirect passing through intermediate parties.

Verify for minimum credit score

This is one of the factors that determine a person’s eligibility to obtain a mortgage. In order to keep greater chances of having a favorable mortgage rate, one has to sustain a credit score of 720 and above. There is a possibility to get a mortgage even without having a credit score of 720 and above, the issue is the rates will not be the lowest.

For people with a credit score less than 620 and a less than 20 % down payment, a lender might refuse your demand for a mortgage but there is a possibility for you to have a mortgage passing through an application written to special kind of lenders who actually care for those in the subprime category.

Is there a need for down payment?

It is possible to get a loan on a house without a down payment, but in general it is good to approach lenders with a down payment at hand. Besides credit score another requirement to obtain a mortgage is the loan-to-value ratio (LTV). In this case you are to show that the ratio of the loan taken to that of the property been acquired is favorable.

A very good situation where an individual obtains a favorable interest rate is when he has 80% maximum as LTV.

Amount of money that can be afforded

The net amount of money that enters your hand after basic expenses should be known because only after that you will be able to determine the kind of mortgage you are going to take. As a tool for assistance, a home affordability calculator can be of aid in having an idea of the ranges of prices on mortgage and choose the best lender.

The Amount of Down Payment Needed

A down payment can be seen as a little percentage of the full amount to purchase the good and service, many a times this amount is non-refundable. So upon purchase of a mortgage if the borrower comes with 20% of the total amount it is good because the interest on the loan is low in the long run.

Preapproval against Prequalification

The aspect of pre-approval and pre-qualification comes in when the time comes to purchase a mortgage. Thought the two concepts look similar but are different in that in pre-qualification the financial institute or the lender can give the borrower details about the different loan options without checking his social security number and credit access. Whereas in the pre-approval the lender has a check down of the entire borrower’s credit report and also require the borrower’s social security number.

Employment record

A follow up of the borrower’s employment profile is a very important point on which the lender bases because it determines the ability of the borrower to repay the mortgage. This implies if the borrower profile shows that he has held his present job for more than two years it is a good sign and serves as a motivation. On the other hand a person moving from one job to another has weaker chances to be granted a mortgage loan.

Compare between fee and rates of interest

On the side of the borrower, in order to choose the lowest annual percentage rate (APR), it is not enough to only know who offers the lowest rates but it is important to know all the fees you will have to pay in the process of obtaining your loan.  Similarly, you will need to ask for the amount of unstated payment like in the case of a penalty if it is not stated.

Verify the lender’s reputation

When an individual or an institute is efficient it is well known and people get to have recommendations for their services. So when going for a particular lender it is important to ask from people who have once used the particular lender.

Conclusively, it can be said that acquiring the necessary knowledge about mortgage like the interest rates can help you chose the right one for your actual situation and save a considerable amount of money.

 

 

 

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